Home business deductions

[goldbeda]

I have two questions related to home business deductions:

1. Mortgage Interest.  TT is saying to check a box "yes, include for this home office deduction".  Why would anybody ever not check it?

2. I am not itemizing deductions because I am SALT limited.  I'm taking the standard deduction.  It says, "if you paid real estate taxes but are not itemizing deductions, enter the taxes you paid here."  I'm assuming "the taxes you paid" are the full amount I paid?  If not, what should I enter? Also, surely it knows I'm not itemizing deductions so why even ask?

Thanks for the help (ChatGPT was clueless)!

[DianeW777]

The answers to your questions are listed here for you as well as updated tax law for state and local taxes (SALT) under the One Big Beautiful Bill Act (OBBBA).

1. If you are using actual expenses, and the mortgage interest was already entered in the itemized deduction section you should always check 'Yes' for your home office deduction. The exception would be if you were using the simplified method for your home office.  See the information below for the details of this deduction. 
2. Yes, you would enter the full amount because your office square feet divided by your total home square fee would be the percentage that would be used. However, follow the instructions on where to enter your real estate taxes (excess real estate taxes on the next screen) if you are not itemizing.

Simplified Home Office Deduction: If used never requires depreciation recapture when sold later.

• Standard $5 per square foot (300 maximum square feet) used to determine home business deduction

SALT - Current Tax Law: The limitation has increased from $10,000 to $40,000 (MFJ) for 2025, limited only if the income is greater then $500,000 (MFJ).  

[goldbeda]

Thank you for your response.  I'm not entirely clear so just to confirm.

1.  I am *not* itemizing because I am limited by SALT so I'm taking the standard deduction.  Should I still check "yes" that I want to take the mortgage interest home deduction?

2. I should have been clearer that I'm asking what amount of taxes I would enter on the "excess taxes paid" screen.  I did enter the total for the home office deduction (which TT will prorate based on %) but should I also enter the full amount for the "excess" as well?

Thanks in advance. 

[VolvoGirl]

Don't confuse itemized deductions on schedule A with your business expenses/deductions on schedule C. They are separate. For Schedule A personal deductions, you get to take your itemized deductions or the standard deduction, whichever is larger. Itemized deductions are things like Medical, Gifts to Charity, State Income Taxes Paid, Mortgage Interest, Property Taxes, Car Registration fees, etc.

You get to take both, your business expenses AND the Standard Deduction (or your personal Itemized Deductions).

For Mortgage Interest you would not check it if you are only taking it on Schedule A for itemized deductions.